Mercari (4385) AI Stock Analysis

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Mercari

(OTC:4385)

Rating:72Outperform

Price Target:

¥2,592.00

▲(5.54% Upside)

Mercari's strong financial performance is the most significant factor, supported by healthy profitability and growth metrics. However, weak technical indicators and moderate valuation reduce the overall score. The absence of dividend yield and lack of current earnings call data limit additional insights.

Mercari (4385) vs. iShares MSCI Japan ETF (EWJ)

Market Cap

$407.52B

Dividend YieldN/A

Average Volume (3M)4.36M

Price to Earnings (P/E)15.3

Beta (1Y)0.60

Revenue Growth2.79%

EPS Growth92.97%

CountryJP

Employees2,080

SectorConsumer Cyclical

Sector Strength79

IndustrySpecialty Retail

Share Statistics

EPS (TTM)87.56

Shares Outstanding164,622,630

10 Day Avg. Volume4,315,540

30 Day Avg. Volume4,361,590

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.21

Enterprise Value/Revenue2.56

Enterprise Value/Gross Profit3.56

Enterprise Value/Ebitda15.69

Forecast

1Y Price Target

$2,975.32

Price Target Upside21.14% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering5

Mercari Business Overview & Revenue Model

Company DescriptionMercari, Inc. engages in the planning, development, and operation of the Mercari marketplace applications in Japan and the United States. Mercari, Inc. was incorporated in 2013 and is based in Tokyo, Japan.

How the Company Makes MoneyMercari generates revenue primarily through transaction fees charged to sellers on its platform. When a user sells an item, Mercari takes a percentage of the sale price as a commission. Additionally, the company offers optional promotional services to sellers, such as listing upgrades and enhanced visibility for their products, which provide additional revenue streams. Mercari also benefits from partnerships with logistics providers for shipping solutions, further facilitating the buying and selling process. The company's earnings are significantly influenced by the volume of transactions on its platform and its ability to attract and retain active users.

Mercari Earnings Call Summary

Earnings Call Date:Aug 05, 2025

(Q4-2025)

% Change Since: |

Next Earnings Date:Oct 29, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant achievements in profitability and technological integration, particularly in the Fintech and cross-border transactions segments. However, there are notable challenges with revenue growth and GMV, especially in the Marketplace and U.S. segments, indicating areas for improvement.

Q4-2025 Updates

Positive Updates

Record High Core Operating Profit

Core operating profit reached JPY 27.5 billion, significantly exceeding the forecast, representing a 46% year-on-year growth.

Profitability Across All Segments

All three business segments, Marketplace, Fintech, and U.S., achieved full-year profitability for the first time.

Fintech Segment Growth

Fintech core operating profit significantly exceeded the initial target, ending at JPY 4.5 billion, with a year-on-year credit balance growth of 32%.

AI Integration Success

AI now generates 70% of code related to product development, leading to a 64% year-over-year increase in development output per engineer.

Cross-Border Transaction Growth

Cross-border transaction GMV exceeded JPY 90 billion, marking a 15-fold increase since FY 2022, now accounting for approximately 8% of total Marketplace GMV.

Negative Updates

Revenue Growth Challenges

Revenue came in at JPY 192.6 billion, falling short of the forecast due to a slowdown in the growth of the marketplace and U.S. businesses, with a 3% increase year-on-year.

Marketplace GMV Growth Below Target

Marketplace GMV growth rate was 4% year-on-year, falling short of the 10% target, largely due to the impact of fraudulent activity.

U.S. Revenue Decline

U.S. GMV and revenue have been on a downward trend over the last three years, despite achieving first full-year profitability.

Company Guidance

During Mercari's FY 2025 Full Year Financial Results Presentation, key performance metrics were highlighted. The company reported a core operating profit of JPY 27.5 billion, surpassing forecasts, with a revenue of JPY 192.6 billion, which, despite being below expectations, still marked a record high. The marketplace, Fintech, and U.S. segments all achieved profitability for the first time, with cross-border transaction GMV over JPY 90 billion and Mercard issuances exceeding 5 million. Looking forward to FY 2026, Mercari anticipates revenue growth of 4% to 9%, aiming for a core operating profit between JPY 28 billion and JPY 32 billion. The company plans to invest in AI and capitalize on its credit business, targeting a CAGR of over 25% in core operating profit compared to FY 2024. Additionally, the Fintech segment saw a significant core operating profit rise to JPY 4.5 billion, driven by a 32% growth in the credit balance. The U.S. business also achieved profitability with a JPY 900 million operating profit. Mercari continues to focus on being an AI-native company, enhancing user experiences, and strengthening its product offerings across all segments.

Mercari Financial Statement Overview

Summary

Mercari shows strong revenue growth and improved profitability margins, but faces challenges with high leverage and negative cash flows. The company needs to address its cash flow issues and manage debt levels to ensure long-term financial stability.

Income Statement

Positive

Mercari has demonstrated consistent revenue growth over the years, with a notable increase in revenue from 2024 to 2025. The gross profit margin remains strong, indicating efficient cost management. However, the net profit margin has shown volatility, reflecting fluctuations in profitability. The EBIT and EBITDA margins have improved, suggesting better operational efficiency.

Balance Sheet

Positive

The company's debt-to-equity ratio is relatively high, indicating significant leverage, which could pose financial risks. However, the return on equity has improved, showcasing better utilization of shareholder funds. The equity ratio is stable, reflecting a balanced asset structure.

Cash Flow

Neutral

Mercari's cash flow situation is concerning, with negative operating and free cash flows in recent years. The free cash flow growth rate has been negative, indicating challenges in generating cash. The operating cash flow to net income ratio is also negative, highlighting potential liquidity issues.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	192.63B	192.63B	187.41B	171.97B	147.05B	106.11B
Gross Profit	138.26B	138.26B	129.73B	114.42B	95.14B	81.80B
EBITDA	31.40B	31.62B	20.42B	19.63B	-3.04B	13.06B
Net Income	26.11B	26.11B	13.46B	13.11B	-7.57B	5.72B
Balance Sheet
Total Assets	543.76B	543.76B	501.77B	415.29B	339.86B	262.53B
Cash, Cash Equivalents and Short-Term Investments	147.03B	147.03B	197.31B	204.73B	218.85B	171.46B
Total Debt	199.38B	199.38B	193.31B	160.55B	131.35B	71.15B
Total Liabilities	444.12B	444.12B	429.63B	360.06B	301.87B	222.52B
Stockholders Equity	99.27B	99.27B	71.84B	55.35B	37.68B	39.63B
Cash Flow
Free Cash Flow	-12.25B	-12.25B	-43.49B	-37.35B	-26.89B	2.95B
Operating Cash Flow	-11.95B	-11.95B	-43.34B	-36.88B	-26.22B	3.37B
Investing Cash Flow	-31.36B	-31.36B	-877.00M	-601.00M	-671.00M	6.91B
Financing Cash Flow	504.00M	504.00M	32.09B	25.17B	62.06B	19.77B

Mercari Technical Analysis

Technical Analysis Sentiment

Positive

Last Price2456.00

Price Trends

50DMA

2436.75

Positive

100DMA

2396.95

Positive

200DMA

2227.41

Positive

Market Momentum

MACD

5.81

Negative

RSI

60.57

Neutral

STOCH

85.48

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4385, the sentiment is Positive. The current price of 2456 is above the 20-day moving average (MA) of 2277.68, above the 50-day MA of 2436.75, and above the 200-day MA of 2227.41, indicating a bullish trend. The MACD of 5.81 indicates Negative momentum. The RSI at 60.57 is Neutral, neither overbought nor oversold. The STOCH value of 85.48 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4385.

Mercari Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4385	72 Outperform	$407.52B	15.31	31.21%	―	2.79%	92.97%
Sector *	61 Neutral	$17.78B	13.97	-5.40%	3.03%	1.50%	-15.71%
RKUNF	―	$13.64B	―	-25.86%	―	―	―
MONOF	―	$8.71B	35.97	28.41%	1.66%	―	―
SATLF	―	$8.44B	27.83	55.06%	2.59%	―	―
7685	76 Outperform	¥105.72B	25.26		0.89%	53.22%	93.84%
3964	69 Neutral	¥90.82B	15.17		2.49%	29.05%	33.61%

* Consumer Cyclical Sector Average

Performance Comparison

JP:4385

Mercari

2,456.00

82.50

3.48%

RKUNF

Rakuten

6.05

-0.58

-8.75%

MONOF

MonotaRO Co

14.17

-1.47

-9.40%

SATLF

ZOZO

9.52

-0.84

-8.11%

JP:3964

Aucnet, Inc.

1,874.00

712.63

61.36%

JP:7685

BuySell Technologies Co., Ltd.

3,395.00

669.47

24.56%

Mercari Corporate Events

Mercari Reports Strong Profit Growth Amid Modest Revenue Increase

May 7, 2025

Mercari, Inc. reported its consolidated financial results for the nine months ending March 31, 2025, showing a modest increase in revenue by 2.3% compared to the previous year. The company achieved significant growth in core operating profit and operating profit, with increases of 48.7% and 58.9% respectively, indicating improved operational efficiency. The financial position of the company also strengthened with an increase in total assets and equity, reflecting a stable financial outlook. Despite the positive financial performance, the company maintained a policy of not issuing dividends for the fiscal year.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 15, 2025